BIR readies tax audit on large, NCR taxpayers

MANILA, Philippines - Seeking to ramp up revenue collections, the Bureu of Internal Revenue (BIR) is set to examine the Value-Added Tax (VAT) returns of large and National Capital Region taxpayers.

The BIR has issued two Revenue Memorandum Orders (RMOs) to ensure tax compliance and boost revenue collections.

Revenue Memorandum Order Nos. 19 and 20-2012 specify the pilot of the 2012 Value-Added Tax Audit Program for its large Taxpayers and Metro Manila Revenue Regions (RRs) like Caloocan, Manila (excluding taxpayers under Romblon, Palawan and Occidental Mindoro), Quezon City, and Makati City.

The RMOs aim to implement a monitoring system, without undertaking a VAT audit, to correct taxpayer errors and violations in the most recent VAT returns filed to improve VAT compliance in the subsequent VAT returns filing and payment.

Under the RMOs, a VAT Audit Team, composed of a VAT Audit Manager and Revenue Officers will audit/investigate the 1st and 2nd quarter VAT returns of 2012 of large taxpayers and NCR taxpayers and every quarter thereafter except for VAT returns with tax credit/refund claims or those under audit by the Special Investigation Divisions (SIDs) and the National Investigation Division (NID).

According to the BIR, those that may be selected for audit if they are:

1. Taxpayers whose VAT compliance is below the established 2010 and 2011 idustry benchmarks, whichever is available;

2. Taxpayers whose VAT returns for the succeeding quarters show substantial decrease in tax payment;

3. Taxpayers whose VAT returns reflect substantial input taxes from importations and local purchases, such as when the total purchases claimed exceed 75 percent of the total sales;

4. Taxpayers with no VAT return filed in any quarter or all the quarters in 2011;

5. Taxpayers who are reporting/filing “No Operations” Returns;

6. Taxpayers with a history of declaring excess input tax carry over for all the quarters of 2011;

7. Taxpayers who have not submitted their Summary List of Sales (SLS) or Purchases (SLP)

8. Taxpayers identified to have significant under-declaration of sales as a result of the Tax

9. Compliance Verification Drive and/or other programs of the Bureau;

10. Taxpayers filing exempt VAT returns due to availment of tax incentives or tax exemptions; and

11. Such other taxpayers selected by the head of the VAT Audit Team subject to approval by the Regional Director.

The BIR will also hold additional VAT briefings for taxpayer awareness on various revenue districts in Metro Manila.